Austria: OneClearstream activation for OeKB issued securities - Asset services market specifics
Effective
10 December 2018
with the activation of OneClearstream services for the instruments issued by Oesterreichische Kontrollbank Aktiengesellschaft CSD GmbH (OeKB) and in addition to the previous announcements (A18119, A18107, C18042, C18046), asset servicing will be subject to the following market specific changes.
Corporate actions on stock (based on settled positions)
For Clearstream Banking AG1 customers, using the OneClearstream service, corporate actions on stock will be subject to the OneClearstream service level as described in the OneClearstream Functional Specifications (for example payment of all corporate action proceeds in T2S, asset servicing instructions and reporting in OneClearstream standards and at sub-account level, the use of blocking sub-account 851, proxy voting services).
There is no change of service level for Clearstream Banking S.A.2 customers3.
We remind that, although all ISINs will set up according to their tradable unit size, fractions will continue to be handled in accordance with the Austrian market practice as follows:
- If applicable, fractions will be paid out with a denomination of 0.001.
- If not applicable, provided that company pays out only whole shares, no fractions will be paid.
In terms of payment management, no withholding tax is deducted from interest on Austrian debt securities. The current standard rate of withholding tax on Austrian equities is 27.5%, which is reclaimable via the standard reclaim procedure at Clearstream Banking. The eligibility of beneficial owners to reclaim tax applied on Austrian equities is limited only to residents of Double Taxation Treaty (DTT) countries.
Corporate actions on flows (market claims, transformations and buyer protection)
For Clearstream Banking AG customers, using the OneClearstream service, corporate actions on flows will be subject to OneClearstream service level as described in the OneClearstream Functional Specifications (for example payment of all market claims proceeds in T2S, asset servicing reporting in OneClearstream standards).
There is no change of service level for Clearstream Banking S.A. customers except the below.
Market claims
Market claims applied to domestic trades with OneClearstream market counterparties will be generated as matching settlement instructions.
The detection and compensation rules for market claims on domestic trades will be further aligned with the Issuer-CSD rules:
- The Opt-out as well as the Cum-/Ex-Indicator will not be taken into account for market claims detection.
- Market claims will be processed on a gross basis without tax adjustment for interests and on a net basis (at maximum withholding tax rate) without adjustment for dividends.
- Market claims will continue to be generated only upon corporate action (cash and/or securities delivery) settlement.
- Although all ISINs will set up according to their tradable unit size, if the calculated quantity of units from a market claim results in a decimal number, the resulting fractions are either compensated for in cash or not, as announced by the issuer:
- If an issuer in the Austrian capital market does not grant a compensation in cash and there are fractions, the free of payment market claim instruction will show the quantity of units commercially rounded to a maximum of three places after the decimal comma. If securities are quoted in nominal value, the amount will be commercially rounded to a maximum number of two places after the decimal comma.
- If the issuer compensates for any fractions in cash and a reference price for compensations is announced, the market claims would be generated as follows:
- A free of payment instruction for units without places after the decimal comma; and
- A free of delivery instruction where the cash amount equals the product of the compensation price and the places after the decimal comma (fractions).
- For CHOS events neither market claims nor transformations will be generated. For other events, the standard Clearstream Banking rules would apply as described in the CBL Customer Handbook.
Please refer to the Market Link Guide - Austria for further information.
Note: The market claims instructions will continue to be triggered upon payment authorisation of the underlying corporate action after 1 December 2018, as per market practice on the Austrian market (C18037).
Transformations
Re-instructions due to transformations applied to domestic trades with OneClearstream market counterparties will be generated as matching settlement instructions.
The detection, cancellation and re-instruction rules for transformations on domestic trades will be further aligned with the Issuer-CSD rules:
- Although all ISINs will set up according to their tradable unit size, if the calculated quantity of units from a transformation results in a decimal number, the resulting fractions are either compensated for in cash or not, as announced by the issuer:
- If an issuer in the Austrian capital market does not grant a compensation in cash and there are fractions, the transformation instruction will show the quantity of units commercially rounded down from the maximum number of places allowed for the ISIN to a maximum of three places after the decimal comma.
- If the issuer compensates for any fractions in cash and a reference price for compensations is announced, the transformations would be generated as follows:
- A free of payment instruction for units without places after the decimal comma; and
- A free of delivery instruction where the cash amount equals the product of the compensation price and the places after the decimal comma (fractions).
- For CHOS events neither market claims nor transformations will be generated. For other events, the standard Clearstream Banking rules would apply as described in the CBL Customer Handbook.
Buyer protection
The manual buyer protection mechanism will apply.
The manual buyer protection mechanism is a bilateral agreement between the trading parties by means of a manual process (no intervention from the market infrastructure regarding the exchange of buyer protection instructions).
Customers must use the CAJWG compliant template, attached below, for buyer protection invocation (BPI) if the requested corporate action option is not the default option. The template must be completed by buyer with the relevant information (for example corporate reference, option(s), the quantity of securities and the underlying transaction) and communicated directly to the seller.
In line with the CAJWG Market standards for Corporate actions processing, the MT564/568 Corporate Action Notification messages will include the following Buyer Protection (BP) key dates:
- Election to counterparty deadline in :98a::ECPD;
- Guaranteed participation date in :98a::GUPA.
Further information
Please refer to the Market Link Guide - Austria for further information.
Additional information about the OneClearstream service activation and migration can be found on the Clearstream website under Product and Services / OneClearstream.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
---------------------------------------
1. Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.
2. Clearstream Banking S.A. (CBL), registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.
3. Including Clearstream Banking AG customers with Clearstream Banking S.A. 6-series accounts.